- Silver remains trapped within a range around the $ 26.00 level on the first day of a new week.
- The formation of a bearish flag pattern supports the prospects for further weakness in the short term.
- Mixed technical indicators warrant some caution before positioning for a significant decline.
The price of silver lacks a firm directional bias and ranged from tepid gains to minor losses around the $ 26.00 level at the start of the European session on Monday.
Looking at the technical picture, the XAG / USD has, so far, managed to stay above the confluence support of $ 25.75-70. The mentioned region comprises the 100-period EMA on the 4-hour chart and the lower bound of a nearly four-week rising channel.
Given the recent sharp pullback from the key psychological level of $ 30.00, the upward sloping channel constitutes the formation of a bearish flag pattern. Sustained weakness below will mark a new breakout and could spark some aggressive technical selling.
Meanwhile, the technical indicators on the 1-hour chart have moved lower, but are still in bullish territory on the daily chart. This makes it prudent to wait for sustained weakness below the channel support before confirming the bearish breakout.
A convincing breakout will make the XAG / USD vulnerable to accelerate the slide towards the key psychological level of $ 25.00 on the way to the horizontal support at $ 24.65-60. Some subsequent selling would allow the bears to challenge the $ 24.00 level.
The downward movement could extend towards the yearly lows, around the $ 23.80-75 region touched on March 31, en route to the $ 23.20 support zone.
On the other hand, any significant positive movement could continue to face stiff resistance near the $ 26.60-65 region. This, in turn, should limit XAG / USD near the trending channel hurdle, currently near the $ 26.90 area. A sustained move above the $ 27.00 level will negate the bearish outlook and could trigger a short covering move towards the $ 27.65-70 resistance zone.
Silver 4 hour chart
Silver technical levels
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